Mexico's Economy to Shrink 0.3% in 2025, Says IMF

The International Monetary Fund (IMF) has downgraded its global economic outlook, including for the United States, with Mexico facing the sharpest downward revision among major economies, according to the latest World Economic Outlook report released during the Fund’s Spring Meetings.

The IMF now predicts Mexico’s economy will contract by 0.3% in 2025, a significant downward revision of 1.7 percentage points from its January forecast, which had projected 1.4% growth. The Fund attributed this revision to weaker-than-expected activity in late 2024 and early 2025, the effects of US tariffs, geopolitical tensions, and tighter financial conditions.

“The revision largely reflects weaker-than-anticipated activity at the end of last year and the beginning of this year, as well as the impact of US tariffs, uncertainty associated with geopolitical tensions, and tighter financial conditions,” the IMF stated in its report.

The updated forecast outlines a baseline scenario for global growth and inflation, using data available as of Apr. 4. It includes the effects of recently imposed "reciprocal" tariffs but does not consider subsequent developments, such as the 90-day delay in tariff increases or the exemption granted for smartphones. 

The IMF also downgraded its 2025 US economic growth forecast to 1.8%, down 0.9 percentage points from its January estimate. Additionally, it raised its US inflation forecast for 2025 to 3%, an increase of 1 percentage point, citing persistent pricing pressures in the services sector, rising costs for core goods (excluding food and energy), and supply disruptions linked to tariffs.

The report highlighted the broad effects of global trade tensions, noting that countries such as Canada, Mexico, China, and the United States are experiencing the greatest economic strain from tariff policies.

With this revision, the IMF becomes the second major organization to forecast a recession for Mexico. On Mar. 17, the Organisation for Economic Co-operation and Development (OECD) projected an even deeper 1.3% contraction in Mexico’s GDP, with negative growth expected to continue through 2026.

Despite this grim outlook for 2025, the IMF anticipates a return to growth for Mexico in 2026, projecting a GDP increase of 1.4%.

President Claudia Sheinbaum recently criticized the OECD's predictions and reaffirmed her administration’s commitment to avoiding increased public debt as a response to a potential recession.